Oil prices dropped sharply on Friday after Iran announced that the Strait of Hormuz would remain open to commercial shipping for the rest of the current ceasefire. The Strait, a narrow chokepoint through which roughly one-fifth of global crude oil passes, has been disrupted by Iran since the escalation of the US-Israeli offensive, pushing prices to near $120 a barrel and raising fears for global supply chains.
Brent crude fell below $90 a barrel, down nearly 10%, while US West Texas Intermediate dropped more than 10% to under $82. Analysts said the announcement had an immediate effect on markets. “This news is having an immediate impact on markets,” said Kathleen Brooks, research director at XTB. “It gives hope that the war will end soon, and supply chains will return to some normality.”
The development also lifted stock markets. Wall Street’s S&P 500 and Nasdaq Composite opened higher, building on record closes from the previous session. European indices followed suit, with Frankfurt’s DAX and Paris’s CAC 40 each gaining more than 2%.
Iranian Foreign Minister Abbas Araghchi posted the news on social media, though it was unclear whether he referred to the 10-day truce between Lebanon and Israel or an earlier two-week ceasefire between Iran and the United States. President Donald Trump maintained that the US blockade of Iranian ports remains in force.
France and the UK are co-chairing talks among allies to consider deploying a multinational force to secure free passage through the Strait once hostilities end. Market watchers noted that the rapid rebound in equities—nearly 12% in just over two weeks—has caught some investors off guard, forcing them to cover short positions at a loss.
Asian markets showed mixed results, with Tokyo’s Nikkei falling after hitting a record high the day before, and Taiwan’s TAIEX slipping despite briefly becoming the world’s seventh-largest index by market value.
With the ceasefire holding and shipping lanes reopening, traders and policymakers are watching closely for signs of further de-escalation.
